TAPE SUCKS: Inside Data Domain, A Silicon Valley Growth Story by Frank Slootman
Introduction
- Frank has an independent vision of the world that doesn’t seek or especially seem to need outside endorsement, and he expects you to either conform to it or convince him where precisely his thinking might be unhooked.
My background
- Where you locate yourself is a huge factor — looking back on it, I wasted much time not coming to Silicon Valley sooner.
Chapter 1 Nobody knew
- The Data Domain team looked hard-core to me. It seemed like more than half the company had PhDs in computer science.
Chapter 2 Creative destruction
- What is your intended customer not going to buy in order to make room for your product or service in his or her spending allocation? Who are you displacing and why?
- A challenged product sector is obviously a much better starting point than attacking a category that is favorably regarded.
Chapter 3 Do you know your technology use-case?
- Start with the application or use case, not the technology.
Chapter 4 Snuggle up with your customers
- The most important thing we did throughout the journey: resist the ever-present temptation to muck with the strategy.
Chapter 5 Drive your own revenues
- Deal economics also make the case against OEM deals: you end up getting 10-20 cents on the end-user dollar, or thereabouts.
- Building and scaling an effective sales and marketing organization is painstaking work that takes years.
- At Data Domain we hired away the best of the best from our competitors — not only did we gather strength, we weakened them at the same time.
- Work is work, but marketing and inside sales are much more cost-effective than having super-expensive direct sales staff do cold prospecting work (which they are not even very good at!).
Chapter 6 Figuring out the channel
- Resellers start getting interested when their bread-and-butter customers begin asking about your product, and even then they first go back to their mainline suppliers to see if they have something similar.
- Your power is in your own sales function and product — keep that in mind.
- In every deal we worked on our own, we introduced a reseller to the deal to get them a little bit “pregnant” with Data Domain.
- If you don’t bring the channel in, they will bring in your competition.
- Your channel goal is to assure that resellers register opportunities with you; in turn, you protect their registrations from other resellers.
Chapter 7 Know when to hold, know when to fold
- Most ventures seem to spend too much early on, and not enough later on when they could grow faster
- Hiring additional salespeople can be nerve-wracking because if they don’t get traction quickly, you have to shift gears.
Chapter 8 In transition
- You should not care much about profits early on. Instead, you care about maximizing growth while maintaining sufficient cash balances to sustain it.
- It is key to have strong executives who know what level of resources they need and when, and who will make that case with unyielding conviction.
Chapter 9 Hire athletes, not resumes
- We adjusted our search algorithm and began looking for candidates who did not have the resume yet but did have the potential and desire for a career break to get to the next level. We called them ” athletes “: candidates with the right aptitude and behavior profile but without the prerequisite experience.
- We looked for energy, pedigree, passion, ambition, intelligence, intensity, and desire for the job.
Chapter 10 Fail fast
- Do not allow a culture that penalizes mistakes and keeps score.
Chapter 11 Big banks, a target vertical?
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Chapter 12 In the thick of things
- Employees needed to feel the cold winds of competitive threat on a daily basis.
Chapter 13 Show some humanity!
- Software development actually suffers from diseconomies of scale: the more engineers, the slower it goes.
Chapter 14 It is not about you
- Never miss an opportunity to shower your organization with praise
- CEOs who talk about “my guys,” “my CFO,” or “my company” subliminally send the wrong message
Chapter 15 Selling abroad early
- It takes a long time to develop a sales infrastructure anywhere, so you might as well get started.
Chapter 16 The board doesn’t run the company
- You want a CEO who can present a thoughtful analysis with all the pros and cons, not a promotional pitch on how great things are.
- At Data Domain, executive appointments or changes in executive compensation always required board review. Why? I didn’t want to make these decisions without oversight. All other decisions were made with at least one other layer of management overseeing, but in the case of CEO decisions, there isn’t another layer of management
- Keeping good council is strength; caving in on perceived pressure is weakness.
Chapter 17 Going public
- Investors scrutinize board credentials to make sure there are experienced adults overseeing the new high-fliers.
- The IPO is largely a marketing event.
Chapter 18 Getting acquired
- There is no doubt that EMC put rocket fuel in our tank with their global sales and distribution channels.
Chapter 19 Post-acquisition
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Chapter 20 A RECIPE for success
- It is innate in human nature that when people come together without the right behavioral guidance, they can do very bad things to each other.
- RECIPE = Respect Excellence Customer Integrity Performance Execution
- People learn culture based on what behavior they observe around them, good, bad, or somewhere in between.
- While we might be somewhat patient and forgiving on performance, we would not be on conduct.
- I’d go as far as to say that company culture is the only enduring, sustainable form of differentiation.
Chapter 21 Respect — the ‘ R ‘ in RECIPE
- We valued respect between managers and employees.
- They don’t “work for you” — we all work for the company.
- We put you — the manager — in their service.
- Data Domain was a company where anybody could talk with anybody, me included. You didn’t need your manager’s permission to seek somebody out in other parts of the company or “higher up in the chain”
Chapter 22 Excellence — the first ‘ E ‘ in RECIPE
- Quality doesn’t expand your addressable market; you feel constantly pressured to make decisions that compromise quality.
- Excellence was not just for our products and services. We employed people who were in finance, accounting, HR, legal, and we wanted them to be the best at what they did for us.
- Our glasses were always half empty — there was always room up, on everything
- Early on, when employee candidates asked us what our culture was like, we invariably said “blue collar.” Not a lot of flash — if it doesn’t directly aid our cause, we don’t spend money on it.
- Humble and hungry is what we wanted to be.
Chapter 23 Customer — the ‘ C ‘ in RECIPE
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Chapter 24 Integrity—the ‘I’ in RECIPE
- integrity means we never knowingly speak anything but the truth to our stakeholders.
- Don’t lie, including by omission.
- Our sales engineers (SEs) were tasked with configuring and sizing systems that fit the customer’s needs as best we understood them, and were also responsible post-sale to help install and implement. We held them accountable for customer success. They were teamed directly with a sales account lead, and served as a check on overzealous sales promises
Chapter 25 Performance — the ‘ P ‘ in RECIPE
- We hired, fired, promoted, rewarded, and recognized based on performance.
- We had no Management-By-Objectives (MBO) goal setting, and wanted all executives paid on the same metric: growth of the business.
- We allocated bonus money to departments and asked the managers to allocate that money every quarter and produce a strong bell curve where the smallest bonus was 0% and the largest was 200-300%. No peanut butter spread where everybody gets 100 % of his or her bonus.
Chapter 26 Execution — the second ‘ E ‘ in RECIPE
- No strategy is better than its execution.
- Business is 99 % execution (versus strategy).
Chapter 27 Did RECIPE survive?
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Chapter 28 What’s it like?
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